Alibaba makes a Netflix-esque foray into subscription video

Alibaba’s smart TV platform in action. The TV OS was launched in 2013.

Alibaba will be launching its paid subscription service Tmall Box Office (TBO) in a mere two months, Reuters reported yesterday. Liu Chunning, president of Alibaba’s Digital Entertainment Business, announced at a press conference in Shanghai that he wants to create a whole new family entertainment experience, elaborating that “our goal is to become like Netflix in the US, HBO in the US.”

Contrary to the established business model of market leader Youku/Tudou, Liu intends that subscriptions will be needed for about 90 percent of the content slated to be available on the platform. Liu stated that both monthly subscriptions and pay per view mechanism were being considered as payment options.

This is just the latest news in an ongoing series of announcements by China-based companies vying for an increased share of the US$1.09 billion online video market.

China’s new media battle

This announcement follows closely on the tail of news at last week’s Xiaomi Beijing product launch where CEO Lei Jun reiterated his position on Xiaomi’s digital entertainment platform. Lei Jun announced that Xiaomi is continuing to invest significantly in its digital entertainment business, having formed 100 new content partnerships since the beginning of this year.

At last estimate Xiaomi had pledged US$1 billion for its emerging platform and had content partnerships with 10 out of 12 of the top content producing websites in China.

Xiaomi goes to pains to explain that it is concentrating on a series of content partnerships and distribution arrangements rather than positively intending to produce its own content. Lei Jun explained this decision allows it to cooperate together with any number of video websites to furnish content for its users.

Another worthy mention in this scuffle for dominance is top-three video producer LeTV who operates in much the same fashion that Alibaba does with its series of LeTV-branded smart TVs, set-top boxes and now even its own line of smartphones.

Alibaba’s smart TV OS already contains some paid content (pictured), but the upcoming TBO pushes that further.

Unlike Alibaba, LeTV has been active in this space since 2011 and some of its more recent achievements include having produced and distributed notable hits like The Expendables 3, the Tiny Times franchise and even Zhang Yimou’s most recent film Coming Home.

Through its motion picture subsidiary Le Vision Pictures, LeTV is investing significant sums to further facilitate cooperation between both Chinese and American film and television producers in an effort to see more co-productions and an increase of targeted resources concentrated in the largest film market in the world.

Notably absent from these recent happenings is any input in this space from market leader Youku/Tudou, which currently dominates with unique monthly visitors of over 500 million. Although it is public knowledge that Alibaba in fact has a stake in Youku/Tudou amounting to 18.5 percent it is as yet unclear as to how this relationship might evolve. Tech in Asia reached out to Alibaba for comment on this story and will update if a response is provided.